Generous Tax Breaks for Second Home Owners Reinstated
The previous government abolished the tax advantages on furnished holiday lets in April, but they have now been reinstated by George Osborne.
Those who own a furnished holiday let can offset any losses they make against other sources of income, such as their salary. This could make it a major tax reason for owning a furnished home.
Some investors who have a capital gain could now delay paying tax on it by investing the profits in a furnished holiday let, providing another appealing tax break. Such investors might include commercial farmers and those selling furnished holiday lets or businesses.
Tax manager Naomi Smith at chartered accountants Grant Thornton, said to the Telegraph: “It is great news for people with a typical holiday home in areas such as Cornwall and Devon as they will continue to enjoy the tax breaks, which in turn helps local economies... and it may encourage wealthy professionals to invest in rural locations.”
Earlier this year accountants had warned that 20 per cent of those owning second properties that are let out would be forced to sell if rules were abolished. It was also suggested that abolishing the rules would deter anyone thinking of buying a holiday let in the future.
Before holiday lettings rules can apply, certain conditions must be met. During any 12-month period the property must be actually let for at least 70 days and available to let for 140 days in total. Furthermore, the same person cannot rent it for a continuous period of more than 31 days during any 7-month period.
Property Investment news posted by Marilyn on 23 June 2010
